Friday, August 26, 2011

The Eurozone: A Family Snapshot

Given what is going on in the eurozone at the moment, I thought it would be nice to have a snapshot picture of it, circa 2010.

 Data: Eurostat (2010)
Ninety percent of the Eurozone's GDP is produced by just seven countries

Before you reach Greece, number 8 on the list with a mere 2.5%, you are already up to 89.99% of total GDP.  That is to say, the "black sheep of the family" is a relative spiffle and its fiscal troubles should have been dealt with firmly and - most importantly - FAST.  It didn't happen, so the debt crisis has been allowed to fester and spread, threatening to become a serious systemic issue for the entire European Union.  A huge mistake for Europe's leaders, particularly Frau Merkel and Monsieur Sarkozi who should have known better.  Much better.  

After the collapse of the USSR and America's Bush II, it seems that it is now Europe's time to go through its very own Era of Total Ineptness.

History is a harsh mistress whose cycles shall not be disturbed, indeed...

7 comments:

Arnould said...

It is possible to write to Sarkozy on paper or by email. 3 years ago, about when Bear Stearns went bankrupt, I wrote to him a few times arguing that History will remember today's political leaders as the worst of the 21st century (and I meant also Obama...). Unless they started to restructure debt instead of creating more with their "plans de relance": you must know that at end of 2008 we even got a "ministère de la relance" to create more debt and spend the money faster. I received some polite thanks for my letters. Since then I wait for the big krach, the day when all the debt/money in the world will vanish.

Arnould, Paris, France.

Anonymous said...

The debt crisis has been allowed to fester and spread, threatening to become a serious systemic issue for the entire European Union. A huge mistake for Europe's leaders, particularly Frau Merkel and Monsieur Sarkozy who should have known better.

IMHO there is no way that this crisis could be avoided and Nobody needs to know better. I just do not buy it!

Sure this crisis could have been avoid in due time. When was that? In 2005 when Volcker did put his wise words:

http://www.washingtonpost.com/wp-dyn/articles/A38725-2005Apr8.html

Who listened? Nobody!

Words by Volcker that you can contrast with a Bernanke text, at the very same date:

http://www.federalreserve.gov/boarddocs/speeches/2005/200503102/

Sure the this crisis could have been avoided... With a regulated banking sector, policy-makers with a long perspective. No need to dream.

A few people were talking in the desert. Who listened to them? Nobody except those who, like Roubini, were professors and had an audience...

Wise men with a family to cater to purchased gold and stop their talk and got back to work.

It looks very much like a tragedy in the original Ancient Greek style.

Anonymous said...

Yea. It baffles me how many people have been caught by surprise.

What has been happening was no surprise, but a logical conclusion from the totally absurd policies intentionally put in place.

I tried to talk to people about the coming mayhem and suggested purchasing gold some years back. I was told I'm talking nonsense. Well, bought some gold myself anyway, saved a penny, been working hard. Not buying cars, computers or other fancy gadgets.

What is really alarming right now is that the political leaders are absolutely incompetent and do not seem to comprehend the crisis at all. None of the EU countries run a surpluss and none of the leaders have explained how the debts will be paid back. The debt is cumulating regardless of any Greece bailout.

Arnould said...

Anon, please remember that Diane de Poitiers died from eating too much gold - albeit at a very advanced age for her times, and only after an accident during a horse riding...

Hellasious said...

Re: Gold and Greek debt (bonds, etc.)

They are both trading sardines.

Gold is in the "up" cycle, where if you open the heavily overprice tin and try to eat them you will discover they are just ordinary stinky fish.

Greek debt is in the "down" cycle, where no one believes there's even any fish inside the tin and prices it accordingly.

Search this blog under "Zebadiah".

Debt Problems said...

It's crazy that so many leaders can turn a blind eye on the debt issue. How you can look at at one nation's problem as if it were some isolated, contained problem. This is a global economy! These problems are long and far reaching...

Hellasious said...

"How you can look at at one nation's problem as if it were some isolated, contained problem. This is a global economy! These problems are long and far reaching..."

How very, very true.

German and Chine enormous trade surpluses are PIGS' and US deficits. This is not a crisis created by some "bad" apples. It's the entire orchard that is at fault.